In this paper we propose a novel and efficient model for compressed sensing of hyperspectral images. A large-size hyperspectral image can be subsampled by retaining only 3% of its original size, yet robustly recovered using the new approach we present here. Our reconstruction approach is based on minimizing a convex functional which penalizes both the trace norm and the TV norm of the data matrix. Thus, the solution tends to have a simultaneous low-rank and piecewise smooth structure: the two important priors explaining the underlying correlation structure of such data. Through simulations we will show our approach significantly enhances the conventional compression rate-distortion tradeoffs. In particular, in the strong undersampling regimes our method outperforms the standard TV denoising image recovery scheme by more than 17dB in the reconstruction MSE.